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General Advice discussions and advice. Participate in ongoing dicussions and get invaluable General Advice advice from people who are experts in their industries or start a new General Advice discussion.
Junaid
( 1014 posts )

[24 Replies]
Dear all,

I just want to get some opinion/advices regarding rolling a fixed amount of capital in short-term sale/purchase of plots. For example, if someone invests Rs. 5 million in rolling only, how much profit can it generate and how often?

Which method pays off better in the long term, Rolling or Holding plots until big jumps or constructing houses and then selling them on a profit?

Respected seniors are requested to give their input on this thread.

Thanks

    2633 days ago In General Advice
    Post Answer
    PAKISTANI-1
    (3020 posts)
    Best Reply
    If your source of income is buying and selling of property, then you need to keep rolling. You have no choice. You are paying your expenses from trading-profit, but in this case eventually, your net worth will reduce because you will be selling in good area (for example Zone 1) and buying in distant area (For example Zone 2) and then from Zone 2 you will be pushed back to outside Zone 2 etc. This is because you are pocketing the difference.

    So if you are in the business of property trading, it is better to also do some property dealing. This way you can increase your net worth. You will pay your bills from commission income and you can invest your profit in improving your investment portfolio.

    On the other hand, if your source of income is something else, and you are a long term investor, then I think the best approach is to buy in strategic locations which are newly developed or nearing development completion. This way, you have a good 10 or 15 years to see your investments growing exponentially (they will keep rising - firstly from completion of development, then from start of utilities, then from population increase, then schools etc). Just buy in areas where a new road or flyover is in the pipeline - for example B-17 or E-16/17 and then forget about it and go to sleep.

    Or instead of strategic location, you can buy on the basis of big-brand-labels such as Bahria Phase 8, or Bahria Golf or Multi Orchards or DHA Valley. These are good even though location is quite far. Why? Because of the brand value and standard of development. Eventually they will make it big insha-Allah sooner or later.

    But if you have another source of income, and you still want to roll, then you will take quite a bit of risk and you may make big time profit too. Or you might lose some value here and there. In this case, you should have the stomach to take some loss. In some investments you will lose and in some other investments you will gain - may be even big gain!

    But in most cases salaried people and professionals such as engineers, accountants and doctors dont have the mentality to take loss so easily. After all it is their hard earned money.

    On the other hand, for professional property traders - it is easy come easy go. So they will make some bucks here and lose some bucks there.

    For salaried type people it is not advisable to keep rolling. Firstly, they are not in the market so they are depending on others to tell them what is good and what is not. Secondly, they will take tension when they lose. Thirdly, sooner or later a smart property dealer will get rich at their expense! This tension is in addition to tension of their job.

    So my advice: Just make a mixed bag of investments - preferable in 1-2 cities if you can and then just sit back with a hot coffee in your hand and enjoy the ride on the passenger seat. Let the Malik Riazs and Ch Majeeds of the property world do their job!
      2632 days ago 

      AJ
      (564 posts)
      As real estate investor long term investor is successful but if you are a dealer,then you can roll your investment by buying the item in demand first and then sell it to end user as by this way dealer became rich.But for normal investor rolling investment is just waist of time and money.One should not hesitate to switch his investment,if he feels his previous decision was wrong or no more fruitful as compared to other available options.That's my point of view and not necessarily one should agree with this:)
        2633 days ago 

        Imran
        (82 posts)
        Agreed AJ; but this is also my opinion, sometimes u succeed by rolling, but than u watch the property carefully.
          2632 days ago 

          Khan
          (177 posts)
          I am also confused in similar sort of situation...thinking which one will b better for a 10m investment:



          constructing a home in Safari Vally Abu Bakar block or rolling money in plots
            2632 days ago 

            AJ
            (564 posts)
            It's good to roll money in files as nothing is concrete on ground.Rolling investment can prove useful in stable market too.But paying commissions to brokers on every deal,and sells in panic and buy in excitement in short time ,let the investor in loss in long term.For short term rolling investment,Human psychy matters a lot along with decision making power which affects in excitement and in depression.So it is good for dealers not for investors.So I would say trading in files rolling investment could be good if you trade with authority and understanding but for developed plots.Buy and hold strategy is good for investors.

            Well as compared to investing in construction,it's better to invest in plots.That's my assessment and agree to disagree.

            @Imran.Yes you can win sometimes in short time but in long term,short term investor will end up in a loss or less profit as compared to long term investor.

            But trading in files is different,You can make good money, you can loose handy money too in short term.
              2632 days ago 

              Junaid
              (1014 posts)
              Thanks everyone for your advices. AJ bro I agree with you but it seems that I need to be well connected to the market and really understand the dynamics. I'm still learning things so it might be a bit tricky for me. But yes, rolling in files seems good, if the file rates crash then all one can do is hold them until they rise again.



              Respected seniors such as Mr Khan, Nasir Khurshid, MBS, Pk1, Syed Ibrahim, Zafar Ullah and others please advise.
                2632 days ago 

                Shoaib Manso..
                (328 posts)
                Excellent Question put in by MR. Junaid....



                I would say for rolling money in construction... Its not an easy thing for every man... It requires experience, skill and know how of property market as well as construction... And thats only few people around can master.... Also construction activity is a full time job, if you want to make it really profitable you must do it yourself.. I mean investor and contractor should be one.. If you have a safe construction bacground and knowledge, then think it that way... Otherwise think many times before making any decision.



                For a common investor AJ is right its the holding thing which is feasible.... Putting money in files can be risky. It can turn out both ways....either good or bad .... In simple it involves more risk....



                First you must identify your situation, convenience and set out your targets and aims, work out a feasibility study for yourself keeping in veiw all your factors.... Then it would be easy for you to decide which way to go.



                Thats just my opinion
                  2632 days ago 

                  Irfan
                  (1106 posts)
                  Excellent reply by PK1. I agree with him
                    2632 days ago 

                    AJ
                    (564 posts)
                    Well said PK1.Specially I liked this part of your post,

                    "So my advice: Just make a mixed bag of investments - preferable in 1-2 cities if you can and then just sit back with a hot coffee in your hand and enjoy the ride on the passenger seat. Let the Malik Riazs and Ch Majeeds of the property world do their job!"

                    Just to add, If you are property dealer then it could be worth rolling your money.while sitting in your estate office,buy from someone who needed money badly and to sell someone who is keen to buy.Both will be contacting you in your office by telephone or will come physically to give you best bargains.One top of that they will give you commission too.:)
                      2632 days ago 

                      Calm
                      (182 posts)
                      Well explained PK1.
                        2632 days ago 

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